What are the Roles of IRDA? – An Overview
IRDA stands for Insurance Regulatory and Development Authority, is the highest authority that authorises the working of insurance business in India. It was established by the Insurance Regulatory and Development Authority (IRDA) Act, 1999. The primary roles of IRDA is to protect the interest of the policyholders and ensure the nation’s insurance growth. Scroll down to check various functions & roles of IRDA.
What are the Aims of IRDA?
Following are the aims of IRDA:
- Maintain the development of the Insurance Sector;
- Prevent wrongdoings and frauds;
- Carry forward the policyholder’s interests;
- Make sure rapid resolution of claims;
- Make sure fair conduct in the fiscal market when dealing with the insurance.
What is the Importance of Roles of IRDA?
Insurance Regulatory and Development Authority is an independent apex legal body, controls and develops the insurance sector in India. In India, insurance dates back to 1850 with the General Insurance Organisation established in Calcutta. Since then, there emerged different players in this market. Each organisation rehearsed business on its own rules and rates. It made customers untrustworthy, which brought into issue the validity of the insurance. With time the management understood this reality and later established an independent administrative body called IRDA. After that, new requests came out, and the market was overflowed with insurance products.
Understanding the Roles of IRDA in the Indian Insurance Sector
In India, the insurance industry, established in the early 1800s, has developed over the decades with better importance and clearness on safeguarding the policyholders’ interest. Here are the roles of IRDA in the Indian Insurance Sector:
- Safeguarding the policyholders’ interest;
- Encourage transparency & fairness of insurance in financial markets;
- Take suitable actions when high standards are maintained, and fiscal stability is observed by the policy providers;
- To makes sure the finest level of self-regulatory is maintained in the insurance business;
- Help in advancing the growth of the insurance industry in an organised way for the benefit of the ordinary man;
- Take suitable actions when high standards are not maintained;
- Make sure authentic claims are settled efficiently
- Deliver long-term funds to boost the Indian economy.
Various Roles of IRDA
As per the IRDA Act, 1999 (Section 14), the authority should make sure the improvement, regulation and encouragement of the insurance business. Some of the vital roles of IRDA are mentioned below:
- To provide the candidate with the Insurance Company Registration Certificate, amendments, renewal, cancellation/suspension, withdrawal of such registration.
- To describe the code of conduct applicable to the surveyors and to assessors.
- To promote and control the relationship of professional organisations and the insurance & reinsurance businesses.
- To call for conducting enquiries, information, investigations, undertaking examination and investigations, comprising the insurer’s audit, intermediaries, insurance mediators and other organisations associated with the insurance business.
- To safeguard the interest of policyholders in the case of nomination and assigning policyholders insurable interests, knowing insurance claims, cancelling the policy value and other terms and conditions of the insurance contract.
- Make sure the proficiency and efficiency of the conduct of the insurance business.
- To control or legalise the benefits, rate, terms & conditions offered to the insurer pertaining to general insurance business not controlled & regulated by the Tariff Advisory Committee under Section 64U of the Insurance Act 1938.
- To describe required code of conduct, qualifications and practical training for mediator or insurance mediators and agents.
- To uphold the investment funds by the insurance entities.
- To administer the working of the Tariff Advisory Committee.
- To protect the policyholders’ interests in the case of nomination and assigning of policyholders.
- To change, grant or cancel Insurance Company Registration license.
- To regularly frame laws to remove any range of uncertainty in the insurance sector.
- To impose the charge to carry out the aim of the Act.
- To identify the way in which the books must be maintained and the way in which the statement of accounts is to be provided by insurers and other insurance entities.
- Regulation of the upholding of margin solvency.
- To decide the arguments among the mediators and insurers of insurance mediators.
- Setting out the percentage of life and general insurance business to be taken forward by the insurer in the social sector or rural sector.
- Setting down of the percentage most adequate income of the insurer of the finance schemes to encourage and control the professional organisations.
- To control the insurance industry in a manner that makes sure fiscal soundness of the applicable laws & regulations.
- To take action where the suitable standards are insufficient or not enforced efficiently.
- To perform such other roles of IRDA as maybe (Insurance Regulatory and Development Authority) prescribed.
There are some of the vital roles of IRDA inspects. With the economy of India attracting insurance players, we see a way of new insurance players in the market. Here the Insurance Regulatory and Development Authority will have a vital role to play. To keep the speed of improvement or development, the roles of IRDA must be performed correctly sufficient to provide every player with a fair deal and also to ensure that the clients also have various plans to choose from.